Why Facebook just made one of its biggest acquisitions yet
It might be facing scrutiny from antitrust regulators—but Facebook has just made one of its largest bets yet.
On Monday, the social media giant announced plans to acquire Kustomer, a customer management platform. While Facebook was mum on the financial terms of the transaction, sources at multiple publications peg the price at around $1 billion—below the acquisitions of Whatsapp for $19 billion and Oculus VR for $2 billion in 2014, but in the range of the famed acquisition of Instagram for $1 billion in 2012.
So why is Facebook making the acquisition? Facebook has been growing its base of e-commerce tools in a bid to increase its business users. In May, Facebook rolled out Facebook Shops, which allow businesses to create online stores via Facebook or Instagram. Whatsapp recently made it possible for businesses to chat directly with customers through the app. The pandemic seems to have only accelerated the focus on the sector.
“Increasingly, texts and messages have become just as important as that phone call—and businesses need to adapt,” Facebook’s Vice President of Ads and Business Products Dan Levy and Whatsapp COO Matt Idema wrote in a post on the Kustomer acquisition. “Messaging provides a better overall customer experience and drives sales for businesses.”
Companies that focus specifically on customer communication—like Twilio—have lately seen demand for both their services and stock soar.
That said, while Facebook may be best known for its social media platform rather than customer support business, the Kustomer acquisition will undoubtedly add to the antitrust grilling it is currently undergoing. Federal and state antitrust authorities are expected to file new lawsuits against Facebook or Google by the end of January, according to the Wall Street Journal.
But Facebook will still argue that Kustomer is not a core part of its business and is not a social networking app. As a Facebook spokesperson told the New York Times: “We will continue to demonstrate to regulators that competition in the technology sector is vibrant.”
Lucinda Shen
Twitter: @shenlucinda
Email: lucinda.shen@fortune.com
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